Options Expiration: What Happens When Options Expire?

The number one reason why some crypto traders tend to avoid trading options entirely is because they’re afraid of the complexities involved with options expiration. With the Option Greeks in play, throwing expiration dates into the mix can certainly be daunting for anyone new to the world of derivatives learning how to extract the most profit when trading them. 

What happens to the crypto once the contract expires within the stated strike price? Can any action be taken to keep the option contract active? 

Find the answers to these queries and more with our ultimate guide to options expiration, as we explore what happens when options expire — and what you can do as an options trader if you’re faced with a low days-to-expiration options (DTE) contract.

Key Takeaways:

• Options are contracts that grant the holder the right to buy or sell an underlying asset at a specific price on or before a predetermined expiration date.

• Traders have several choices to consider before an option’s expiration date, depending upon their market outlook and risk tolerance. They can choose to exercise the option, close the option position, let the option expire or roll the option over.

• What happens when options expire will depend upon whether the options expire in the money or out of the money.